CX in Supermarkets & The Hunger for Technology

Is technology translating to a superior customer experience?

26 October 2017

Written by: Jessica Sparkes

The rise of online shopping has shifted customer expectations, disrupted business models, and revolutionised industries. So, as customers continue to substitute bricks-and-mortar for digital channels, is technology translating to a superior customer experience?

Research by KAE found that, the supermarket segment received a higher customer experience ranking than Telecommunication companies and Airlines, two industries where customer experience should be at their core. Investment in customer experience across these industries has been witnessed over the last year. For example, BT pledged to invest £6 billion in its 4G and fibre networks, with a particular focus on call handling technology and service quality to help improve its customer experience. This piece looks at how satisfied customers are with leading supermarkets and how the evolution of technology is impacting their experience.

Fig 1: KAE Customer Experience Study 2017

KAE’s Customer Experience Study 2017 (Fig 1) found that customer experience within the grocery shopping segment is consistent for supermarkets, with little variance between the most satisfied customers and the very dissatisfied customers. As supermarkets seek to gain competitive advantage, technology could pave the way as a key point of differentiation.

We have already seen that this is a sector ready for disruption. Recently, Tesco, Sainsbury’s and Marks & Spencer witnessed their share prices fall by approximately 10% as Amazon announced its takeover of Whole Foods. Amazon also has approved trademarks in the UK for its ‘Amazon Go’ service, its checkout-free store using a combination of technologies, including sensor fusion and deep learning algorithms, to try and ensure customers pay the right amount. Now the market awaits the impending launch of a store that promises no queues for customers. The online giant penetrating the UK grocery market has shed a new light on the sector, and has raised new questions on how other supermarkets will be leveraging the best of physical stores and digital platforms to ensure a better experience for their customers.

Three emerging CX strategies in the grocery landscape

The question remains: what areas are supermarkets investing in to enrich their customer’s journey? As part of the 2017 Customer Experience Study, KAE has uncovered three strategies being undertaken in the marketplace in a wider effort to improve customer experience:

Last year, Morrisons and Amazon partnered to launch “Morrisons at Amazon” – an online fresh food service enabling Prime members to shop online for products and selected postcodes can receive their delivery within one hour. The supermarket has also committed to continue “investing in becoming more competitive and improving the shopping trip” which infers championing further technology. This is not the first time Morrisons has partnered with a technology brand, as their online distribution network has been handled by Ocado for a number of years.

2. First-to-market with technological advancements

Ocado ranked highest in the study and is the only digital retailer. Although ranked highest, Ocado also received the most varied ranking with a high number of satisfied and dissatisfied customers. KAE previously explored the notion that the Internet has bred a generation of customers with higher expectations from brands. This could explain why Ocado received a varied customer experience ranking, as dissatisfied customers had higher expectations for an online grocery retailer than other supermarkets. Nonetheless, Ocado still received a higher ranking than its competitors and pins its success on technology.

The Ocado Smart Platform, its e-commerce solution for partners to improve their online service, claims to offer the “very latest technology”. Ocado is also the first supermarket in the UK to leverage voice biometric technology, enabling customers to modify their online orders via an app compatible with Amazon’s Alexa. With this feature customers can ask Alexa if Ocado sells a certain product, the total cost of their order and whether the delivery is on time. Still in its early stages, the app has received poor reviews, which suggests that further investment is required to perfect the service and stay ahead of the curve. While Amazon has its finger in a fewpies, there has also been a surge in traditional supermarkets following in its footsteps and investing in technology.

3. Supermarkets investing in proprietary technology

KAE research shows that Sainsbury’s customers are relatively satisfied with their experience, and the retailer has recently attempted to improve the customer journey by developing an app dubbed “SmartShop”. Similar to Amazon’s Go stores, SmartShop allows customers to pay for groceries automatically via their smartphone in order to skip queues. Sainsbury’s Head of Customer Experience has noted that the supermarket aimed to develop a solution that was “genuinely useful” to customers, in this case saving customers’ time. According to Tesco’s Group Payments Director, the supermarket is also trying to “transform the shopping journey” for its customers by revamping its digital wallet “Pay+” (previously PayQwip). The app aims to make the customer journey more convenient and the payment process seamless, by allowing customers to add multiple cards onto the wallet, automatically collect Clubcard points, and track their spending. Both Sainsbury’s and Tesco are trying to make their apps available, with Sainsbury’s offering free WiFi in-store and Tesco requiring no data connection for customers to make the payment.

Pointing investment efforts to point-of-sale (POS) is a popular area for grocers looking to enhance the customer experience, and Costcutter has recently innovated in this field. Currently in pilot phase at a UK University, Costcutter is the first grocer to introduce payments via vein authentication in an effort to make the payment method secure and simple. With fingerprint recognition, infrared technology, biometric mapping, and card details stored with Worldpay, the customers in this store do not need to carry a physical or digital wallet, streamlining the POS stage in their overall journey. Sthaler, the company behind the biometric technology, is reportedly planning to roll-out this technology into other retailers as well as the hospitality and fitness sectors, illustrating the POS is an important element of the customer journey, which still has room for improvement.

Improving the digital experience while leveraging current assets

Our proprietary research uncovered that Aldi, Asda and Tesco are in the same ballpark when it comes to how satisfied their customers are. This can be linked back to customer expectations; a customer walking into a budget supermarket is likely to have quite different expectations to a customer walking into a premium grocer.

It’s vital that all retailers consider how technological developments may impact their customer base. Before investing in a new technology, retailers need to be asking themselves ‘what value will this add to my existing customers, and how will it entice new customers?’

To answer these questions, a granular level of insight about customer needs is required. In many cases, technology is implemented to speed up processes and create a seamless shopping experience, and retailers should be aware of which parts of the journey customers are dissatisfied with so that goal is achieved. Once this has been understood and painpoints have been identified, retailers can prioritise problem areas and create strategies for improvement. With this in mind, retailers can then refine their channels in a more targeted manner that produces an outstanding customer experience, a worthwhile investment in technology, and importantly, satisfied shoppers.

This blog post forms part of a Customer Experience in Retail series by KAE

To find out more about the findings from the KAE Customer Experience Study 2017, please reach out the team via cx@kae.com

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